In 2021 I sold ISOs, which I exercised in 2020, as part of a company acquisition. Because the sale was less than a year after I exercised them, they were sold as a disqualifying disposition and the compensation income is reported in box 1 of a W-2. The total proceeds are listed on a 1099-B. The cost basis is not listed, but I know it is (exercise price x number of shares) compensation income, and TurboTax Premier online correctly indicates the capital gain.
The problem is I can’t find how to indicate that the compensation income is on a W-2. Therefore, TurboTax is saying I have a penalty for underpayment of estimated taxes as none were withheld on that W-2. But as that W-2 shows compensation income it’s correct that no taxes were withheld.
Does anyone know how to indicate that the compensation income for this ISO sale is on a W-2 so I don’t get an underpayment penalty? Thanks!
